One group of 20 trainees estimated a total overall monthly cost benefit of $336,000 related to business improvements and showed an average 70 percent confidence level with that estimate. The calculation is as follows: 70 percent multiplied by $336,000 gave a cost-benefit of $235,200. This number was divided by 20 ($235,200/20 trainees) to give an average estimated cost benefit for each of the trainees ($11,760). To calculate ROI,
1. Identify outcomes (e.g., quality, accidents).
2. Place a value on the outcomes.
3. Determine the change in performance after eliminating other potential influences on training results.
4. Obtain an annual amount of benefits (operational results) from training by comparing results after training to results before training (in dollars).
5. Determine the training costs (direct costs + indirect costs + development costs + overhead costs + compensation for trainees).
6. Calculate the total benefits by subtracting the training costs from benefits (operational results).
7. Calculate the ROI by dividing operational results by costs. The ROI gives an estimate of the dollar return expected from each dollar invested in training.